"Positive credit effects are likely to develop for the higher education sector as elite universities offer more classes for an unlimited number of students through low-cost, open courseware platforms," said Moody's VP-Senior Analyst Karen Kedem, author of the report. "However, there will eventually be negative effects on for-profit education companies and some smaller not-for-profit colleges that may be left out of emerging high-reputation online networks."

The extent of longer-term credit impacts on individual universities will vary widely, according to the report entitled, "Shifting Ground: Technology Begins to Alter Centuries-Old Business Model for Universities". It explains the phenomenon of massive open online courses or MOOCs, which have the ability to serve an unlimited number of students across the globe.

"MOOCs create new revenue opportunities, increase brand recognition, and provide improved operating efficiencies," said Kedem. "The availability of open platforms enables a university to post content without incurring the cost of developing and maintaining the infrastructure."

According to Moody's, MOOCs and related technology have the potential to transform a university's operations, academic and social programming, and pedagogical approach.

"Most universities will likely gravitate to a 'mixed' model that combines residential learning with the new technology, some will increasingly feature online course delivery, and some colleges may choose to create a niche by remaining focused solely on the traditional residential-classroom experience."

The residential college model will remain viable, says Moody's, but less-selective, smaller colleges that are unable to join emerging networks or carve out an independent niche will likely experience credit stress driven by declining student demand.

Moody's subscribers can access the report at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_PBM144483.* * * * *

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Karen Kedem Vice President - Senior Analyst Public Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653John C. Nelson MD - Public Finance Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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